Interest Rate Cap
/ˈɪntrɛst reɪt kæp/
Definitions
- (n.) A contractual limit on the maximum interest rate that may be charged on a variable-rate loan or debt instrument.
The borrower was relieved when the interest rate cap prevented their payments from rising above 8%.
Forms
- interest rate caps
Related terms
Commentary
Interest rate caps are crucial risk management tools in loan agreements, protecting borrowers from excessive fluctuations in interest costs.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.